Accountant caught backdating documents in $20m tax fraud – The Australian Financial Review

High-profile accountant Gerry Incollingo has lost his appeal against his suspension as a tax agent over his role in backdating documents for colourful Sydney property developer Charbel Demian in a $34 million tax case.
Accountant Gerry Incollingo regularly appears in media articles advising on consumer tax. 
Last month, Justice Robert Bromwich dismissed claims that the Tax Practitioners Board’s findings on Incollingo relied on testimony he gave in a 2020 court case under a Section 128 certificate.
Courts issue Section 128 certificates to allow witnesses to make self-incriminating statements without the fear that their testimony will be used later to prosecute them.
Mr Incollingo, who regularly appears in media articles advising on consumer tax, had sought a judicial review of a TPB decision in December 2021 to suspend his registration for six months over his part in the tax fraud.
The TPB conduct board, which has been accused in Senate estimates hearings of imposing overly lenient sanctions, opted for a brief suspension rather than deregistering Incollingo, saying that he was affected by “personal and emotional challenges” and this was a first offence. However, he was also found to have presented backdated documents in a separate 2007 court case.
Mr Incollingo’s role in preparing fake documents was uncovered in a Federal Police raid on his accounting firm LCI Partners in December 2017, according to a 2018 judgment by Justice Anna Katzmann in the Federal Court. At the time, the NSW Independent Commission Against Corruption was tapping phone conversations between Mr Demian and disgraced Liberal backbencher Daryl Maguire, though the raid was not connected with this.
In January 2015, during an audit of the Demian property group, the Tax Office issued an order to Mr Incollingo as the group’s tax advisor to produce documents showing distributions made by a related unit trust. In March 2015, Incollingo provided documents to the ATO that were dated May 2003, Justice Katzmann said.
But this came unstuck when the AFP seized email records during a raid on LCI Partners in December 2017. The metadata of the documents that Mr Incollingo had provided to the Tax Office showed they were created not in 2003 but in February 2015, Justice Katzmann found.
LCI Partners internal emails showed increasing frustration in contacting Mr Demian, with Incollingo telling another LCI account to text Demian “telling him that it is URGENT!”
When the work was completed it took numerous calls before Mr Demian came to the office to sign the fictitious documents.
In 2018, the ATO issued $20 million in assessments and $14 million in penalties.
It was Incollingo’s second run-in with the Tax Office. In 2007, Justice Kevin Lindgren in the Federal Court described him as “attempting to rewrite history in an effort to achieve what he considers to be a more fair and just result for his clients, and one that perhaps he thinks they would have agreed to if he had recommended it”.
Mr Incollingo had provided documents to the ATO dated 1999 that Justice Lindgren said were made in 2005. In his latest appeal, Mr Incollingo claimed the Tax Practitioners Board had improperly used his cross-examination during a 2019 trial when he was granted a Section 128 certificate.
Justice Bromwich dismissed this, finding that Justice Katzmann’s earlier ruling and subsequent witness statements made by Incollingo confirmed he had backdated the documents.
The judge appeared to question the sanction imposed by the TPB conduct committee. Had the testimony covered by the Section 128 certificate decision been available to the committee, Justice Bromwich said, “it is difficult to see how they could have reached the beneficial conclusion that they did as to Mr Incollingo’s conduct”.
The conduct committee found that Mr Incollingo’s actions in facilitating the $20 million tax fraud were extremely serious, deliberate and calculated, but as this was his first offence before the TPB it should be seen as an aberration, as he was well-regarded in the profession and had a family member ill at the time.
For these reasons his registration was suspended for six months, not cancelled. Mr Incollingo and his lawyers did not to respond to questions from The Australian Financial Review.
Tax Practitioners Board chair Peter de Cure previously faced Senate criticism over sanction against former PwC partner Peter Collins for tax leaks. Alex Ellinghausen
The TPB compliance committee, which is made up of former accountants, faced sharp criticism during Senate estimates hearings this year. Labor Senator Deb O’Neill and Greens Senator Barbara Pocock both questioned why former PwC partner Peter Collins was deregistered for two years rather than the maximum five years after he leaked confidential Treasury plans, which PwC used to market workarounds for new tax avoidance laws.
TPB chairman Peter de Cure, who sat on the conduct committee, said at the time that Mr Collins had shown remorse, the offence was five years earlier, and there hadn’t been a repeat of the behaviour.
Last week, the TPB handed down a five-year deregistration to Victorian tax agent Isaac Brown after he raised $3.75 million after filing fictitious GST statements for clients without their knowledge.
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